A Clear Plan for Our Future: Working Together for Stability & Success

At the meeting, the Board received the district's Second Interim Budget Report, which reflects the district's financial status as of the end of January and includes adjustments since the First Interim report in December.

Overall, the update shows continued financial stability with mostly minor midyear adjustments. Revenue and expenditures remain largely in line with expectations. The district recognized modest increases in state funding, including career technical education grant funds and adjustments tied to enrollment. At the same time, careful management of staffing vacancies and spending in several operational areas helped offset rising costs. Overall revenue is projected to be $541,482,843.

Some expenses have increased, particularly in utilities and special education services, which required adjustments to the budget. The district also set aside funds to address potential insurance-related costs. Even with these changes, the overall impact on the unrestricted ending balance is relatively small. Overall expenditures are projected to be $579,250,770.

Looking ahead, the district continues to refine its multi-year financial projections, incorporating updated assumptions from the Governor's proposed state budget. While some state funding details remain uncertain, current projections show the district continuing to move toward a balanced unrestricted budget by 2027–28 through a combination of ongoing budget solutions and responsible financial planning.

In response to budgetary reductions indicated at the state level and the impact of declining enrollment, the Board approved two resolutions resulting in personnel reductions: Resolution No. 35-2026 (Certificated Employees); Resolution No. 34-2026 (Classified Employees).

A summary of the positions impacted by these resolutions can be seen in the table below. For full details, please review each linked resolution.

Over the coming months, additional personnel changes, such as retirements and resignations, are likely to occur, impacting the actual number of layoffs.

Eric Dill, Associate Superintendent of Business Support Services at Poway Unified, provides an update on the district’s budget and financial goals.

Listen and watch here:

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Recap of the First Interim Budget and Actions Taken

The District has made meaningful strides in reducing the unrestricted budget deficit since the First Interim, indicating improved fiscal alignment. However, new estimates for the 2026–27 cost-of-living adjustment (COLA) are lower than projected, resulting in reduced Local Control Funding Formula (LCFF) revenue in the Multi-Year Projection.

The Board reviewed how recent budget-balancing actions implemented in 2024–25 and 2025–26 have improved the District's financial trajectory. Even with these improvements, further actions are needed to ensure a sustainable long-term budget.

Budget Scenario - One Year Ago

Budget Scenario Now - Without Further Reductions

Impacts of the Governor's Budget Proposals

Staff outlined how the Governor's proposed 2026–27 state budget affects PUSD revenues across several major funding categories. Overall, the proposal includes lower LCFF COLA estimates and continued reliance on various one-time and categorical funding streams.

• LCFF Funding: The LCFF would increase based on a 2.41% COLA in 2026–27, resulting in a revenue decrease of approximately $2.6 million compared to prior projections.
• Block Grants:
  • Student Support and Professional Development Block Grant provides $16.7 million in estimated one-time revenue.
  • Learning Recovery Emergency Block Grant offers an estimated $1.58 million.
  • ELOP funding increases by an estimated $710,267.
• Special Education: The Special Education AB 602 base grant is projected to increase by $81.47 per ADA, improving revenue by roughly $1.6 million, with an additional increase in 2027–28.

Overall, while some categorical and one-time supports increase, the lower COLA creates pressure on the District's ongoing general-purpose revenues.

Budget Reduction Strategies

To stabilize the budget and meet state-required reserve levels, staff presented seven strategies totaling $10.1 million in ongoing and one-time savings:

1. Adjust Certificated Staffing to Enrollment: Enrollment continues to decline 1–2% annually. Natural attrition is sufficient to right-size staffing without raising class sizes. Ongoing savings: ~$2.7 million.
2. Reduce High-Cost, Low-Enrollment Programs: Restructure programs to improve services and shift costs. Ongoing savings: ~$479,000.
3. Adjust Classified Staffing to Enrollment: Align hours with student schedules. Shift eligible costs to ELOP and Fund 63. Ongoing savings: ~$475,000.
4. District Office Efficiency: Continue streamlining and reorganizing central office functions. Ongoing savings: ~$700,000.
5. Ongoing Program Funding Shifts: Move some CTE, VAPA, and administrative costs to restricted funds (e.g., Proposition 28, Adult Education). Ongoing savings: ~$920,000.
6. One-Time Funding Shifts: Use remaining block grant balances to cover certain prior commitments in 2026–27. One-time savings: ~$4.8 million.
7. Contingency Planning: Hold discretionary block grant funds for potential federal cuts or one-time technology refresh. Not yet included in budget totals.

Updated Outlook and Next Steps

With the proposed budget reductions applied, the District's unrestricted general fund is projected to stabilize in 2026–27.

1. Without reductions, reserve levels fall toward the state minimum.
2. With reductions implemented, the unrestricted ending balance is projected to remain healthy through 2027–28.

The Board is expected to finalize assumptions in May and adopt the 2026–27 Annual Budget in June 2026. Any major programmatic changes would involve further study and community input before being brought back for final Board direction.

A link to the full Budget Workshop Presentation, as well as additional information about the programs reviewed, are available here.

Budget Scenario Now - With Reductions

Associate Superintendent of Business Support Services Eric Dill discusses the Legislative Analyst’s Office 2026-27 Fiscal Outlook and how that impacts Poway Unified School District.

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There were no significant reports for this board meeting.

At the August 14, 2025 Board Meeting, staff presented an updated project design for the Rancho Bernardo High School / Bernardo Heights Middle School chiller replacement project. The Board approved a design contract, which will authorize consultants to proceed with updated design development and the preparation of project specifications. Key updates are below.

Urgency of current situation

• The current HVAC system serving both RBHS and BHMS utilizes air handling units (AHUs) that are 20 years old—some 30 years old—and nearing end of service life.
• The chilled water system that feeds into these AHUs cannot provide needed cooling due to leaks in underground chilled water distribution piping.
  • Waste of energy
  • Leads to increased water treatment costs
  • AHUs incapable of providing cooling as needed
• The HVAC system uses a Central Plant to provide chilled water and hot water to the AHUs at both schools. This Central Plant is using original equipment that is 30+ years old.
  • The majority of Central Plant equipment is not functioning.
    • This has led to renting a temporary air chiller to support cooling needs, incurring $22K/month in extra costs.

Accounting of work needed

• Work needed:
  • New Chiller Plant
  • New Boiler Plant
  • Removal of existing non-functioning thermal energy storage system
  • Replace leaking underground piping with above-ground piping
  • Install packaged direct-expansion rooftop HVAC units for 80% of BHMS

Cost savings

• Cost savings for HVAC modernization total about $610,000 per year:
  • $264K per year saved by eliminating temporary air chiller
  • $346K per year saved in energy costs with improved efficiency
• Significant cost savings could also result from the below issues:
  • Loss of chilled water due to underground pipe leaks
  • Increased water treatment costs due to pipe leaks
  • Increased maintenance needs for aging system/li>
  • Aging equipment will require replacement in another 5-7 years

Impact on students

• Students endure the discomfort and potential impact to productivity from the effects of the aging HVAC system.
  • A modernized system ensures student focus on studies and education without daily impact of poor climate in classrooms (ie: temperature, noisy area fans, space taken up by extra cooling/heating equipment in classrooms).

The Cost Savings Analysis provided to the Board may be accessed at this link.

The Board approved the Unaudited Actuals year-end closing financial report. The ‘actuals’ are compared to the ‘estimates’ previously reported on. Financial highlights include:

• Actual revenue across restricted and unrestricted funds was about $475,114 higher than estimated.
• Actual expenditures across restricted and unrestricted funds were about $24 million less than estimated.
• General fund reserves were about 2.2% higher than estimated.

Detailed reports and the Unaudited Actuals Presentation can be accessed here.

The Board was presented with a budget update, which can be found here. Overall the presentation shared details of an estimated revenue adjustment of $13,491,112.

• Universal Transitional Kindergarten (UTK) - revenue estimated increase of $3 million which will cover the additional costs brought on by the change of student-to-adult ratio for TK classes
• Student Support and Professional Development Discretionary Block Grant - anticipating approximately $10.3 million in 2025-26 to be spent by June 30, 2029
• Learning Recovery Emergency Block Grant - Anticipating approximately $800K in 2025-26 to be spent by June 30, 2028
• Expanded Learning Opportunity Program - Anticipating approximately $1.2 million loss in 2025-26 if the funding level is not restored
• Proposition 28 - Arts & Music in Schools - Estimated increase of $568K across all schools

Federal grant funds previously approved by Congress for 2025-26 were frozen on June 30, 2025. Poway Unified faced the loss of over $1 million in General Fund revenue and nearly $300K in Adult Education revenue. Funding was restored to the states on Friday, July 25, 2025. However, there are still uncertainties regarding federal funding in 2026.

Further updates and details will be shared in the 2024-25 Unaudited Actuals Report in September, and official adjustments to revenue projections for the 2025-26 fiscal year will be incorporated into the First Interim Budget Report in December.

The Board approved PUSD’s proposed budget for 2025-26. There were no changes to the budget as presented to the Board at the June 6, 2025 meeting.

Tonight the Board was presented with a first reading of PUSD’s proposed budget for 2025-26. The Governing Board is scheduled to take action on the Adopted Budget at its meeting on June 17, 2025. The 2025-26 Proposed Budget was made available for public inspection on June 1, 2025, on the District’s Finance webpage, and can be accessed at this link. The budget presentation may be accessed here.

Final board resolution for classified employees covered by the Administrative Law Judge’s hearing decision.

By May 22 – Final Notifications sent to employees covered by the Administrative Law Judge’s hearing decision.

Budget revise.

Several layoff rescission letters have been sent to impacted employees and their administrator. To date these include:

• Five (5) Office Assistant II (OA II) positions at the high schools will not be eliminated. Rescission letters sent to all impacted OA II’s who were least senior and/or had the right to displace less senior employees.
• After March 15, several certificated employees submitted resignations, which reduced the number of layoff notices to be served to several employees and also obviated the need for a certificated hearing amongst the Counselor, Tech Trainer, and Special Education M/M groups.

The district is currently in the budget development process and has incorporated $10 million in reductions into its financial assumptions. Department heads are reviewing materials, supplies, services, and contracts to identify redundancies and reduce spending. This information has been shared with the Poway Federation of Teachers, Poway School Employees Association, and Association of Poway School Managers.

Looking ahead, the district anticipates continued adjustments next year, including enrollment growth in transitional kindergarten (TK) and a decline in K-12 enrollment. The district is closely monitoring state and federal developments that impact funding. The Governor’s May Revision, expected May 15, could present risks—particularly if the statutory Cost of Living Adjustment (COLA) is lower than projected or not fully funded. It’s important to note that while COLA reflects inflation, it doesn’t guarantee the state has the resources to fund it fully each year.

District Management Reorganization - Phase 1

Superintendent Churchill presented a reorganization of the district office management structure. Key components of this restructure include targeted position reductions, strategic additions and modifications, and a focus on student achievement and belonging.

The proposed restructure includes reducing from five divisions to three divisions. To accomplish this there will be a net reduction of 10 management positions. The complete presentation can be viewed at this link.

Resolutions to Decrease the Number of Poway Unified Employees

In response to budgetary reductions indicated at the state level and the impact of declining enrollment, the District must prepare for the reduction and/or elimination of classified and certificated positions at the end of the current school year, ensuring the District’s long-term fiscal health, and District program needs. The board approved this resolution, which identifies positions to be eliminated due to a lack of work and/or lack of funds for the 2025-2026 school year.

The following documents list the positions approved by the Board to be reduced or eliminated.

• Classified Employees
• Certificated Employees
• Certificated Preschool Employees

Additionally, a resolution was reviewed and approved to define the criteria determining the order of seniority for employees with the same date of first paid service. This will be the system used to determine which individuals the above resolutions affect. You can view this resolution here.

Second Interim Financial Report

The Board heard a presentation on the Second Interim Financial Report, reflecting the approved operating budget based on the First Interim and actual revenues and expenditures (approved at the December 17, 2024 Board Meeting). In addition, the presentation included the district’s 24-25 projected budget and multi-year projections, prepared with the most current fiscal and economic information. The Board reviewed and approved two resolutions presented during this presentation.

You can review the presentation and the resolutions here.

In this second Board Budget Workshop the Board was presented with a budget update, enrollment projections, and potential budget reduction strategies. Staff shared that the budget deficit reduction process is designed to identify strategic cuts that allow future financial flexibility. The Board reached consensus, based on currently available information, to identify a target of $10 million in reductions to be implemented in the 2025-26 school year, and then an additional $3 million in ongoing reductions will be considered in 2026-27. Strategies for deficit reduction include: 1) personnel reductions, 2) non-personnel reductions, and 3) exploring additional sources of revenue.

The full presentation is available online, and a recording of the workshop can be viewed at this link.

(no updates at this meeting; only board briefs)

The Business Services Support Division presented current and projected figures, including enrollment trends and attendance rates, program budgets, and revenue and expense projections. The board also reviewed various scenarios showing different timelines for deficit reduction and discussed their priorities for addressing the deficit. The goal of the workshop was to provide critical information needed to develop a budget deficit reduction plan. No decisions were made nor were any reductions proposed.

The full report is available online, and a recording of the workshop can be viewed at this link.

Staff provided a budget planning update, including a look at the work that was done previously to reduce the budget deficit in the current year. Here is what was included in the Board Brief:

• Interim Associate Superintendent Greg Magnuson spoke about the development of the budget, current challenges, and PUSD’s next steps toward fiscal stability. This process includes developing accurate projections, ensuring adequate reserves, and taking actions to reduce budget deficits.
• Previously, the district had committed to a $12.5 million deficit reduction for the 2024-2025 school year. So far, 90% of that reduction plan has been realized. For the 2025-2026 school year, the district is considering up to a $13 million deficit reduction. The most recent state budget proposal showed a reduction in funding from the state, including a reduction in the Cost of Living Adjustment (COLA) which fell from 2.93% to 2.43%.
• Mr. Magnuson shared that it is a critical time to be able to make these deficit reductions. Doing so allows PUSD to stay ahead of more severe deficits in light of the current economic climate. The Board of Education will engage in a Budget Workshop to begin exploring options for deficit reduction on Thursday, February 6, 2025, at 4:00 p.m. in the District Office Community Room.

For a full recap of the Board Meeting you can view the Board Briefs here or watch the video here.

PUSD is facing a budget deficit due to multiple factors, including:

1. Declining Enrollment: Fewer students mean reduced state funding, as school funding is largely based on student attendance.
2. Rising Operational Costs: Costs for employee benefits, utilities, and materials continue to increase.
3. State and Federal Funding Changes: Shifts in funding formulas and reductions in one-time pandemic relief funds have impacted the budget.

A budget deficit reduction plan is a strategic approach to balancing the district’s budget by reducing expenses. This is done by taking a close look at trends and projections for the next few years, and outlining a path forward. This plan helps ensure PUSD remains financially stable while continuing to support student success.

Our approach includes:

1. Transparency - Providing clear, timely updates on financial decisions.
2. Engagement - Gathering input from staff, families, and community members.
3. Responsibility - Making thoughtful decisions that prioritize student learning and long-term financial sustainability.

At this stage, no final decisions have been made regarding budget reductions. However, the district is evaluating multiple options to balance the budget and will regularly provide updates.

While budget adjustments will have an impact, we are working to minimize disruptions as much as possible. Possible impacts include:

1. For Students: We are committed to maintaining world-class education, however there may be adjustments to programs.
2. For Staff: We understand that job security is a major concern, and we are actively working with labor associations to explore solutions. Any impacts to jobs will be communicated in a timely and transparent manner.

Your voice matters! We encourage staff, families, and community members to stay informed and participate in the decision-making process.

1. Stay Informed - Continue to visit this site. It will be the most up-to-date source for information, including board discussions, key decisions, and potential impacts.
2. Join the Conversation - Participate in ThoughExchange surveys to make sure your concerns are heard before decisions are made.
3. Collaborate With Us - We are actively working with labor associations, school leaders, and community partners to work toward solutions that ensure student thriving.